Saudi to transfer employees from troubled Oger construction firm

KHOBAR, Saudi Arabia (Reuters) - Employees of troubled construction company Saudi Oger will be moved to other firms, the Saudi labor ministry said, amid unconfirmed reports that workers there will be laid off from July 31.

The ministry said there were 1,200 Saudis among a total of around 8,000 workers at the company, which is owned by the family of Lebanese Prime Minister Saad al-Hariri and has built many huge infrastructure projects in the kingdom, from universities and roads to airports and hospitals.

It said it planned to move some 600 Saudi employees to other facilities and would continue to look for jobs for the remaining Saudis working there. It was also working with Saudi Oger to transfer around 6,000 foreign workers to other firms.

A document described as an internal Saudi Oger memo and seen by Reuters notified employees that July 31 would be the last working day there, in light of “the circumstances that the company is going through.”

The letter, which was also mentioned in a news article by Saudi-owned newspaper al-Hayat on Saturday, was signed by the administration of Saudi Oger. Reuters could not independently verify its authenticity.

The letter did not specify whether the company would close down operations.

A spokesman for Saudi Oger could not be reached for comment, while a source close to the company said there was no decision to close it down. This was confirmed by another senior official.

Sources have told Reuters Saudi Oger plans to transfer some staff working on a mega government project to a new company, in an attempt to mitigate increasing financial pressure.

The collapse in oil prices has prompted the Saudi government to tighten spending, hurting contractors such as Oger that rely on the state for most of their projects. The contractor owes banks in the kingdom about 13 billion riyals ($3.5 billion) and faces a funding crisis because it has not received any new funds from the government for projects.

Sources told Reuters in April the government had appointed PricewaterhouseCoopers to conduct a review of Saudi Oger’s major projects in the country and examine how much it is owed by the government.

The review is likely to determine how much the company will receive in outstanding payments, as well as whether it will continue working on the projects.

The labor ministry has previously intervened to transfer 3,800 foreign staff at Saudi Oger to other companies, while a further 11,500 left the firm.

Reporting by Reem Shamseddine; Editing by Mark Trevelyan